INTB 3351History of GlobalizationReading Study GuideThe Creation of the First Global EconomyReadings:Jeffrey Frieden, Global Capitalism, 1-27Stephen Yafa, Cotton: A Biography of a Revolutionary Fiber, Chaps. 2-3, pp. 25-69(scanned PDF documents in WebCT, skim pages 47-63)1.What was mercantilism? A system of economic control which was used to exploit colonial markets and strengthen royal dominance. Mercantilism enriched the crown, which then used those riches to buildup military forces.How did it work? Under mercantilism, the colonial power forced its colonies to trade with the mother country, to enrich the government and its supporters. The mercantilists compelled their subjects to sell many goods only to them, paying the colonies less than world market prices for crops and raw materials. Sometimes the crown’s own armies oversaw the extraction of natural resources. Most of the time crown princes worked with merchant princes to squeeze profits out of captive colonial markets. What were the key factors behind the shift from mercantilism to free trade?(Frieden, pp. 2-6)Technological innovations revolutionized production starting around 1750, manufacturersand British bankers wanting the British market to be open again. Once the market were tobe opened then British manufacturers could lower their costs directly by importing cheaper raw materials, and indirectly because without reducing workers’ standard of living. Once Britain switched to Free Trade the rest of the world joined.2.What was the “Gold Standard”?(Frieden, pp. 6-7, 16-21) The most powerful organizing principle of global capitalism during the nineteenth century. When a country’s government went on gold, it promised to exchange its currencyfor gold at a pre-established rate.

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